More than just home loans
Having been in property finance as a lender, mortgage manager and a broker since the early 1980's, I've seen several downturns in the market. Property owners (and lenders) have lost money, bankers have had enforced career changes, lessons have been learned and the world has eventually moved foreward.
For the last 18 - 24 months we've been wondering how much further the property market can go before we get a fairly significant reality check.
This time around the basics are so far out of the norms that it could be longer and deeper than any of the past recesssions. Real estate has become a national obsession supported by a the media and governments that have discovered that a bigger population generates huge tax windfalls.
Like Sydney, recent auction results have indicated a deterioration in the strength of the Melbourne housing market. Auction clearance rates have ranged in the low 60% to high 50% range, which, while a little stronger than Sydney, nevertheless signals somewhat weaker conditions.
The inner regions of Melbourne appear to be recording softer auction clearance rates - high to mid 50% range. While the eastern suburbs (South East and North East are recording clearance rates in the mid 60% range.
Total property listings remain at low levels however there has been a recent trend upwards in recent months to the point where listings are 6% higher than 12 months ago (April 2017).
Asking prices, after rising at year on year levels of up to 22%, have slowed in pace to an annualised rate of 5-7%. SQM Research expect vendors to adjust to the market further in coming months as days on market for listed properties is increasing.
It should be noted that on a nominal aggregate incomes to dwelling prices measure, the Melbourne market is approximately 49% overvalued. SQM Research expects this overvaluation to wind down somewhat over an extended period of time.
SQM Research has downgraded its forecasts for house price increases across the nations' capital cities.
House prices in Sydney and Melbourne are tipped to fall by as much as 4% over the nest 12 months.
See the SQM newsletter dated 8 May 2018 for the full report
The Financial Services Royal Commission has revealed a banking system in disarray. Our big four banks are regarded as being too big to fail - but the Financial Services Royal Commission has revealed they are far from being the pillars of the community that we believed.
The diagram shows the web of activities / entities that each of the banks own. Since the 1980's they have aggressively moved into, and largely taken over
As the Royal Commission has found out (and as many us of knew already) there are far too many conflicts of interest.
Add into the mix an aggressive profit driven sales culture, performance based remuneration across the board, lack of management responsibility and accountability - and the outcome is the current mess.